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Alaska Air completes Virgin America acquisition
December 14, 2016 / 1:57 PM / a year ago

Alaska Air completes Virgin America acquisition

(Reuters) - Alaska Air Group Inc (ALK.N) said on Wednesday it completed its $2.6 billion acquisition of Virgin America Inc VA.O to become the fifth-largest U.S. carrier.

A combination photo shows Virgin America plane (bottom) in San Diego, California on April 4, 2016 and an Alaska Airlines plane (top) at San Francisco, California on April 14, 2015 respectively. REUTERS/Files

The four big U.S. airlines by passenger traffic are American Airlines Group Inc (AAL.O), Delta Air Lines Inc (DAL.N), United Airlines Inc (UAL.N) and Southwest Airlines Co (LUV.N), following years of consolidation within the industry and carrier mergers.

Last week, Alaska Air won U.S. antitrust approval for its acquisition of Virgin America on the condition that it would scale back its code-sharing with American Airlines.

Under the settlement with the Justice Department, the companies would be banned from code-sharing on routes where Virgin and American Airlines now compete.

Code-sharing is also barred on routes that Alaska might start in the future if American also flies them.

CFRA Research analyst Jim Corridore said Alaska’s acquisition of the cost-sensitive California-based carrier would probably lead to higher fares for consumers in the long run.

Consumers will have better route options with Alaska’s access to a wider network, he said, “but in general, any time you have competitor come out of a market, it’s not really good for the consumer.”

    Alaska Air said that with the acquisition, it had nearly 1,200 daily flights to 118 destinations. The companies announced the deal in April.

    The Seattle-based carrier’s stock was down 0.2 percent at $86.73 in midday trading.

    The company said it would continue to operate the Virgin America fleet with its current name for a while and would conduct customer research to understand what fliers value most.

    Reporting by Ankit Ajmera in Bengaluru and Alana Wise in New York; Editing by Martina D'Couto and Lisa Von Ahn

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